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The chancellor has navigated a path to safety, but trouble lies ahead

Philip Aldrick

June 7 2014, 1:01am, The Times

When the dust settles on the Great Recession and the economic historians pick up their pens, my guess is that Britain will get a pretty favourable write-up. The recovery has been slow, and living standards have collapsed, but such bald observations ignore the scale of the problem we faced as a nation.

Finance was Britain’s oxygen, but the industry was cauterised after Lehman Brothers collapsed in 2008. The sector, which at that point accounted for 10 per cent of GDP, is today 13.6 per cent smaller than at its peak and now represents little more than 6 per cent of national output — its long-term trend.

Britain’s lenders held assets equivalent to five times GDP, enough to suffocate the economy as the edifice came tumbling…